BEIJING (Reuters) -China’s top policymakers pledged to support firms and workers most affected by the impact of triple-digit U.S. tariffs and urged the country to prepare for worst-case scenarios, state media reported on Friday.
The ruling Communist Party’s Politburo reiterated plans to accelerate debt issuance, ease monetary policy and vowed to support employers to safeguard jobs as China hunkers down for a trade war with the United States.
No announcement of additional deficit spending beyond what was approved in March came out from the readout.
“It seems Beijing is not in a rush to launch a large stimulus at this stage. It takes time to monitor and evaluate the timing and the size of the trade shock,” said Zhiwei Zhang, chief economist at Pinpoint Asset Management.
The state media Xinhua report on the Politburo’s Friday meeting said the policy toolkit must be continuously refined to stabilize employment and the economy, with new measures introduced in a timely manner as circumstances evolve.
The meeting also called for comprehensive planning for “worst-case scenarios” and concrete steps to bolster the economy, Xinhua said.
The country will increase the proportion of unemployment insurance funds that can be returned to companies greatly affected by tariffs, in a bid to stabilise jobs, according to the readout.
“Multiple measures should be taken to help enterprises in difficulty. (We should) strengthen financing support and accelerate the integration of domestic sales and foreign trade,” Xinhua reported.
“The Politburo meeting emphasized ‘bottom line’ thinking and adequate policy plans, showing a new round of stimulus may be smaller than expected… the significance given to stabilising jobs is higher than economic stabilisation,” said Xing Zhaopeng, senior China strategist at ANZ.
The country will also cut interest rates and banks’ reserve requirement ratio “in a timely manner” and develop consumption in the services sector, according to the readout.
Politburo meetings usually set policy tone rather than unveiling detailed implementation plans.
China’s economy grew 5.4% in the first quarter, beating expectations, but markets fear a sharp downturn in the year ahead as U.S. tariffs pose the biggest risk to the world’s second-largest economy in decades.
U.S. President Donald Trump and Treasury Secretary Scott Bessent struck a more conciliatory tone this week, saying the tariffs were unsustainable and signaling openness to de-escalating the trade war.
Beijing called on Washington to remove the tariffs to create space for talks while also granting some exemptions on U.S. imports from its 125% counter-tariffs.
Chinese President Xi Jinping has toured Southeast Asia and other officials have intensified diplomatic outreach to unite countries against Trump’s tariff offensive. Beijing has also threatened retaliation against capitals siding with Washington.
At home, the government has promised to support exporters who try to shift their sales to the domestic market, in what analysts see as a political message, rather than economic policy, designed to project national pride to the domestic audience and show defiance to the U.S. administration.
Public messaging and diplomatic outreach aside, China’s economy has entered the trade war more exposed than ever before to shocks to global demand, while flirting with deflation due to sluggish income growth and a prolonged property crisis.
China has set an ambitious 2025 growth target of “around 5%”, though analysts believe it may be increasingly difficult to achieve in the face of hefty U.S. tariffs.
The IMF downgraded its forecast for China’s economic growth to 4% this year and next, down 0.6 percentage points and 0.5 points, respectively, from its January outlook.
(Reporting by Kevin Yao, Ellen Zhang, Liz Lee, Marius Zaharia and Beijing newsroom; Editing by Muralikumar Anantharaman, Michael Perry, Philippa Fletcher)
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